You’ve probably all heard that Indian Prime Minister Modi ordered two of the most common high denomination bills (500 and 1,000 rupee) out of circulation and that they would no longer be legal tender after only a few days. India’s economy is, well, not modern. Most people do not have or use credit cards. Only […]

“There was no transparency of these markets at all. No market oversight. No regulator knew what was happening,” Born says. “There was no reporting to anybody.”

Summers, Rubin’s deputy (and now director of the National Economic Council), said the memo had “cast the shadow of regulatory uncertainty over an otherwise thriving market, raising risks for the stability and competitiveness of American derivative trading.”

History, in the form of the role these derivatives played in this economic disaster, has proven that she was right to undertake that initiative. Unfortunately, Greenspan, Leavitt, Rubin, and Summers, to name some major players, were effective in pushing legislation that ended the CFTC’s ability to undertake oversight.

Born assailed the legislation, calling it an unprecedented move to undermine the independence of a federal agency. In eerily prescient testimony, she warned of potentially disastrous and widespread consequences for the public. “Losses resulting from misuse of OTC derivatives instruments or from sales practice abuses in the OTC derivatives market can affect many Americans,” she testified that July. “Many of us have interests in the corporations, mutual funds, pension funds, insurance companies, municipalities and other entities trading in these instruments.”

Notwithstanding, her concerns were dismissed and her ominous predictions came to pass.

Is it not an ironic twist of fate, and a testament to Geithner’s blind faith against oversight, that he, like his mentor before him, is assailing intelligent, moral, qualified women for pointing out the folly of his ways.

{Note: I defer all economic inquiries to our resident expert, Dakinikat. My interest in the situation is the social dynamic.}

PUMAs are the latest incarnation of Cassandra. We have been since May 31, 2008 when the way in which the Democratic party achieved “unity” was to not count more than half of their own party members who did not vote for their pre-chosen candidate. It was done in such a blatantly obvious way that there was no other way to interpret it other than that a giant fraud had been perpetrated on the primary voters. Only in America in 2008 was it possible for a voter in Idaho to completely invalidate the voter in NJ.

We said nothing good ever grows from a bad seed. It hasn’t even been 100 days since Obama took office that he has proven himself to be the most inexperienced, Republican asskissing, shmoozer who ever found something uniquely charming about the unitary executive theory. And now he is taking the economy to the brink of disaster and gently pushing it over with the help of the well-heeled shoes of Tim Geithner and Larry Summers because, heaven forbid we impose any limits on the finance industry or cause their shareholders to lose sleep over their investments.

Indeed, it is possible that their actions are making matters worse. I just have to say here that it’s one thing if you have never seen anything like the situation you face before. You can perhaps be forgiven for initially trying stupid things and making iterative corrections. That’s the nature of scientific inquiry and it’s perfectly acceptable to make mistakes in a lab as long as you wear your goggles against blinding shards of glass that result when your experiment blows up. It’s quite another thing to have witnessed other people make similar mistakes and then decide that repeating their actions makes sense. “Oooo, Robert Mugabe brought Zimbawbwe to its knees with rampant corruption and idiotic policies in just a decade. Cool! Let ME try it! How does this oligarchy thingy work?”

The government’s own policies are facilitating these attacks, because as the Fed and Treasury make progress towards easing credit conditions, this makes it easier and cheaper for large hedge funds and others to take large short positions. And keep in mind the underlying loss of confidence is self-fulfilling: as you lose confidence, you want to go short, and selling the credit causes further loss of confidence – and banks are forced out of business.

The government’s entirely reasonable and long overdue request for a resolution authority will set up runs on that authority. If the authority is not granted, the runs will be on the government’s low and failing ability to save banks – given that the trust of Congress has been lost and no more cash for bailouts is likely forthcoming (presumably until there are large further shock waves or until Goldman Sachs itself is on the line.)

The continuing pressure on banks has nothing to do with populism and everything to do with the internal contradictions of the house of cards they built. Now they will scramble to limit short selling or find other emergency measures that will protect their credit. Such partial fixes would do nothing to stop the underlying deterioration of their credit; think about how countries facing currency attacks throw up futile defenses, try to change the rules, and squander their reserves on the way down.

The problem remains that the people who have the power to fix the problem are the ones who do not listen to the ones who see the future. They stand in the way and guard the establishment’s old machinery that exists because they profit from it.

They have a lot of nerve calling us Luddites.

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Podcast of the Day: Wisconsin Public Radio has a new podcast called To The Best of Our Knowledge. Very progressive. The latest episode is on Depression Stories. It’s not as grim as you think. The first segment is a conversation with a Quaker author Parker Palmer, who has a unique take on depression. He says it’s nature’s way of telling you that you’ve hit bottom and there’s nowhere to go but up. The other segments feature, Depression stories, thrift and a brief biography Frances Perkins, who along with Harold Ickes Sr. was one of the visionaries of The New Deal. They finish up with a Woodie Guthrie song called Madonna on the Curb. Highly recommended. You won’t feel alone in this Depression.

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Body: Last week I went down to Washington, D.C. to deliver a paper at a conference in the technical field where I worked, ten years or so and two or three careers ago, before the dot.com trash. The trip was solely an exercise in merit-making, since I doubt very much I'll get work in the field, but reconnecting with old friends was really great -- even […]

"Barrett Brown has been released from prison; WikiLeaks publishes to celebrate: Today, investigative journalist Barrett Brown has been released from FCI Three Rivers to a halfway house outside Dallas, earlier than initially scheduled. His parents picked him up from the federal prison to drive him six hours to his new residence. Brown's release come […]